Owner Financing and Foreclosure

[Michael Hooper]

I've got a property for sale for $1.2M. I owe $280K on it.  I've been under contract now twice and both times have fallen out during financing. The buyer wants to finance at 20%-25% down and the bank wants 30%-40% down. I just got an offer for $1.3M but they have similar financing terms. I'm thinking about offering owner financing at about $300K down and financing the $1M at 6%-7%. This would give me enough to meet my FIRE goal so I could quit my job. My only worry is, with the market potentially going down soon, especially in the commercial space, what would happen if the buyer couldn't make their payments and I had to foreclose? Do I have to sell the property or could I just take over ownership again? And what would happen to their $300K down payment? If I'm forced to sell what is the value of the property was only $800K after the drop? The goal would be to retain ownership, I just wasn't sure if there's a scenario in which I have to give the buyer back their deposit or at least some of it.